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Below the Quote on November Mutual Fund Inflows: Equity Declines While SIPs Stay Resilient By Rishabh Goel, MD, Tailwind Financial Services

In November, the Indian mutual fund industry experienced mixed trends, as revealed by the latest data from the Association of Mutual Funds in India (AMFI). Inflows to equity mutual funds declined by 14.2% to Rs.35,943.49 crore, compared to Rs.41,886.69 crore in October. Despite this decline, the mutual fund industry's assets under management (AUM) reached an all-time high of Rs.68.08 lakh crore, showcasing investors' continued confidence in mutual funds as a wealth creation tool.

Equity Mutual Fund Trends

Thematic funds led inflows among equity funds, garnering Rs.7,657 crore, although this was significantly lower than the Rs.12,278 crore reported in October. Flexi-cap funds followed, with inflows of Rs.5,084 crore. Large-cap funds saw a notable decline of 26% in monthly inflows to Rs.2,547.92 crore, reflecting investor caution amid volatile markets.

Inflows Across Equity Categories (November 2024):

* Large-cap: Rs.2,547.92 crore

* Mid-cap: Rs.4,883.40 crore

* Small-cap: Rs.4,111.89 crore

Small-cap funds maintained steady inflows, rising 9% month-on-month, while mid-cap funds grew by 4.3% to Rs.4,883.40 crore. The equity market's muted performance, with the Sensex and Nifty falling by -0.27% and -0.31% respectively in November, likely contributed to investors adopting a "wait-and-watch" approach.

Systematic Investment Plans (SIPs)

SIP investments remained a robust pillar of the industry, recording inflows of Rs.25,319.66 crore, marginally lower than October's Rs.25,323 crore. New SIP registrations, however, declined to 49.46 lakh in November from 63.70 lakh in October. Nevertheless, the number of SIP accounts reached a record high of 10.23 crore, underscoring the growing adoption of SIPs for long-term financial goals. The SIP AUM stood at Rs.13.54 lakh crore for November.

Debt Fund Inflows Crash

Debt mutual funds witnessed a sharp 92% decline in inflows, recording Rs.12,915 crore in November compared to Rs.1.57 lakh crore in October. Categories like Liquid Funds, Short Duration Funds, and Floater Funds experienced net outflows, while Gilt Funds saw notable inflows of Rs.1,802.73 crore. This shift reflects investor interest in active duration strategies amid expectations of interest rate cuts driven by signs of economic slowdown.

Hybrid and Other Fund Categories

Hybrid funds saw a steep 75.5% decline in inflows, dropping to Rs.4,123.69 crore from Rs.16,863 crore in October. Arbitrage Funds contributed significantly to this decline, alongside reduced inflows into Balanced Hybrid Funds and Dynamic Asset Allocation Funds.

Index Funds and Gold ETFs also reported lower demand in November. Index fund inflows fell by 45% to Rs.4,342 crore, while Gold ETF inflows dropped 35.9% to Rs.1,256 crore. The marriage season and high gold prices likely prompted investors to book profits and shift to physical gold.

New Fund Launches

The industry saw 18 new fund offers (NFOs) in November, raising a total of Rs.4,052 crore. Of these, 10 were in the index fund category, which collectively raised Rs.523 crore, while three sectoral fund NFOs raised Rs.2,751 crore.

Resilience Amid Volatility

The mutual fund industry continued to demonstrate resilience despite market volatility driven by macroeconomic factors, geopolitical events, and U.S. election outcomes. The sustained SIP flows, combined with selective lump-sum investments during market dips, reflect investors' confidence in mutual funds as a vehicle for long-term wealth creation. Overall, open-ended mutual funds recorded net inflows of Rs.60,363.70 crore in November, compared to Rs.2.39 lakh crore in October. The industry's net AUM grew to Rs.68.08 lakh crore, up from Rs.67.26 lakh crore in October, supported by a growing number of retail folios, which reached an all-time high of 17.54 crore.

Tailwind Financial Services remains optimistic about the Indian market's potential. As the year-end approaches, the mutual fund industry's resilience in navigating market challenges while maintaining investor trust highlights its critical role in India's financial ecosystem. We believe the Indian economy is poised for robust long-term growth. Despite short-term market fluctuations, India's equity market is expected to deliver strong returns over the coming years.

We encourage investors to maintain their focus on equity mutual funds as a reliable avenue for long-term wealth creation.

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